As Bitcoin Rewards Dry Up, Will the Blockchain Tumble Off a Cliff?

Bitcoin Scarcity by Design

Bitcoins are a limited resource. In fact, there are only 21 million Bitcoins in existence, baked into the very protocol that defines the Bitcoin network. Back in 2009, mining Bitcoins was easy; anybody with a laptop could harvest them by the hour. Today, mining operations are primarily industrial-scale data centers, burning gross amounts of energy for small, barely profitable rewards.

As of November 2025, over 95 percent of the total Bitcoin supply has been mined. This means that out of the hard limit of 21 million coins, about 19.95 million Bitcoins are already in circulation. It's a sobering milestone that highlights just how little supply of Bitcoin is left for miners to dig up.

However, just because the Bitcoin supply is running low doesn't mean we are on the verge of running out. The remaining 5% are going to be extremely difficult to mine, due to the protocol being designed with a built-in reward halving mechanism to increase difficulty. The issuance of new coins slows down dramatically over time. This intentional drag on production implies the very last Bitcoin is expected to be mined sometime around the year 2140.

You won't be around to witness the final Bitcoin being mined, but we are going to start feeling the ramifications of the dwindling supply.

Bitcoin Mining Progress

Mining a Bitcoin in 2026 requires a staggering amount of electricity, about 600,000 kWh. That's enough to power a typical American household for about 50 years. While unpopular among environmentalists, Bitcoin mining has transformed into an industrial powerhouse. Literally.

In the early days of 2009, the Bitcoin network issued a reward of 50 BTC for every block solved by miners. Today, that block reward is down to 3.125 BTC.

The growth in network participation is just as staggering as the mining infrastructure. In 2009, the number of active wallet addresses was in the low thousands. By 2026, the network is now processing about 550,000 transactions every single day. We see nearly 1,000,000 active addresses interacting with the blockchain daily.

No More Bitcoin Supply

As the supply of available Bitcoins is depleted, the way miners get paid must undergo a fundamental shift. Currently, miners earn their income from two sources:

1. The Block Subsidy (BTC rewards)
2. Transaction Fees (Paid by Users)

Today, more than 90% of miner revenue comes from the block subsidy. When a miner discovers a new block, they are rewarded with some amount of Bitcoins. The miner can then choose to sell those Bitcoins or hold onto them, hoping for an increase in value.

A problem arises as the Bitcoin subsidy continues to drop. Mining operations are being compensated less and less while the difficulty increases more and more. It is becoming more expensive to mine Bitcoins, and the miners are earning less money doing so.

What happens to Bitcoin miners when the block rewards are no longer sufficient to support the mining operations?

The incentive structure for securing the Bitcoin network (by maintaining a sufficient hash rate) will need to rely primarily on transaction fees. This is in stark contrast with how the model looks today. If those transaction fees are not high enough to keep miners profitable, the miners will simply turn off their machines.

This leads to a serious problem.

Opposing Economic Forces

One thing is certain, and that is economics will force a change in how we actually use the main Bitcoin blockchain. In the future, using the primary chain will feel a lot more like sending a bank wire transfer. It will become the settlement layer where only large, high-value transfers take place, because the transaction fees will be too high for anything else.

Small, everyday transactions on the main chain will simply become too expensive.

For daily activities like buying a coffee, we will increasingly rely on Layer 2 solutions such as the emerging Lightning Network. These systems operate "off chain" by bundling many small transactions together and only settling the final result on the main blockchain. This keeps costs low for the end user while still benefiting from the global consistency of the blockchain.

Remember, the big question is whether transaction fees alone can provide a big enough budget to keep the network safe as the block reward disappears. To keep the current level of hash rate online, the total volume of fees will need to grow significantly. This means the network needs to stay busy and users must be willing to pay for increasingly expensive transactions on the real blockchain.

You might have noticed the problem by now.

Collapse is Possible

There is a real possibility that the demand for transactions at high prices might not be enough to support the existing mining industry. If miners cannot generate a profit, they will stop processing blocks. If miners stop processing blocks, the resulting plummet in hash rate could leave the network open to 51% attacks, potentially destroying the legitimacy of Bitcoin altogether.

The advent of Layer 2 networks is directly opposed to the model of high-volume, high transaction fees. Layer 2 networks are incentivized to keep prices low, combining as many transactions as possible, reducing the number of transactions going through the main blockchain.

There is a mechanism built into the Bitcoin protocol where the difficulty adjustment can make mining easier instead of more difficult. The idea is that as compute power decreases, block rewards are issued more frequently, incentivizing computer power to come back online. But this dynamic has never been tested at a global scale, and certainly not in the face of blocks that do not come with BTC rewards.

If alarm bells aren't going off, they probably should be.

It is unclear what future economic forces will reconcile the nature of Layer 2 networks driving transaction volume down, with the requirement of existing miners to stay interested in supplying computing power. It would only take the disengagement of two or three major mining operations to expose the blockchain to potential takeover. Foundry USA and AntPool already represent about 34% and 27% of the existing hash rate today. At what point do they choose to go offline?

The tipping point for this transition is probably closer than you think. Between 2032 and 2036, the block reward is expected to fall below 1 BTC, which will turn into a major test for the transaction fee-based model. Mining operations are damned expensive, and the value of these small rewards combined with the low transaction fees we enjoy today are simply unsustainable.